The University of Massachusetts Medical School in Worcester is a humming economic engine.

That's the word from James B. Leary, its vice chancellor for community and government relations. In a July 17 interview, Mr. Leary said that according to a survey by the University of Massachusetts Donahue Institute, UMass Medical School's economic impact on Worcester and the state of Massachusetts totals $1.75 billion.

That sounds like a big number to me.

The Donahue study breaks the economic impact into two categories direct effect — that accounts for over $1 billion of this economic impact — and indirect/induced effect, which is the source of the other roughly $700 million.

"Direct effect includes direct employment and revenue/expenditures — i.e., including UMass Medical School's expenditures for goods, services and payroll. Indirect and induced effect represents revenues for local businesses that result from UMass Medical School's local expenditures, and revenues for local businesses that result from employee spending," explained Mr. Leary.

To me the most interesting part of this is the return on taxpayer investment, which results from giving National Institute of Health grants to the medical school.

According to Mr. Leary, "The logic for this is clear. We get an NIH grant and conduct research to develop a therapy for an unsolved medical problem. If the drug or medical device shows promise, private investors provide capital to start a company. And if the company can sell its product to customers, it grows and creates revenue and jobs."

And UMass Medical School is a contributor to these jobs, some through its own employees, and others through companies that supply it and spin off from its scientists' inventions.

"Forty-five percent of Worcester employment is in higher education and health services. Life Sciences create thousands of more jobs," he said. "We are responsible for some of those because we have 182 active licenses to 105 different companies, some of which are local and others operate outside the area."

Mr. Leary mentioned three companies that have licensed UMass Medical School technology, and a fourth that a WPI professor founded but that UMass Medical School provides with research support.

In Mr. Leary's view, the most prominent of these is 50-employee BRM (Biomedical Research Modeling), a provider of "specialty animal models" founded 15 years ago by a former UMass Medical School researcher, Dennis Guberski.

According to Mr. Leary, "Mr. Guberski has a unique understanding of the advantages of building a company in Worcester. He appreciates Worcester's great workforce including the people who graduate from its technical high schools and Quinsigamond Community College."

Another UMass Medical School spinoff that appears to have tremendous promise is Reflectance Medical in Westboro, a maker of non-invasive health monitoring devices, founded in 2012. Reflectance was founded by Dr. Babs Soller, who earned a doctorate in physical chemistry from Princeton, and who was a professor of anesthesiology at UMass Medical School. At UMass, her laboratory developed the technology which has become the company's CareGuide product. Dr. Soller founded Reflectance Medical to bring CareGuide to market.

UMass Medical School Nobel Laureate, Dr. Craig Mello, is the brains behind Westboro's RXi Pharmaceuticals Corp., a publicly-traded biotechnology company that began conducting human trials on a product candidate based on Dr. Mello's RNA interference technology that can "silence the expression of a specific gene that may be overexpressed in a disease condition." Unfortunately, RXi's most recent financial report reveals a scant $50,000 in revenues and a net loss of nearly $18 million.

A final Worcester company — one that combines the scientific skills of WPI and UMass Medical Center — is Grove Instruments. According to Mr. Leary, "Its product could be a big help to diabetes patients, because they could use it to detect their blood glucose level without needing to take blood. It would make a huge improvement in the life of a young Type I diabetes patient."

The WPI part of the company is Robert Peura, a Grove co-founder and its current chief technology officer. He founded WPI's Biomedical Engineering Department and retired as a professor there after 40 years. And, according to Mr. Leary, "Grove gets dedicated research support from UMass Medical School."

The economic impact of U Mass Medical School is a considerable benefit to the region. If more of its licenses find their way into fast growing companies targeting large markets, they could ultimately sell their shares to public investors or to a larger company that could market their inventions globally.

Such exits would get the attention of venture investors seeking to achieve similarly high returns which could provide the fuel to finance further the flow of innovation from UMass Medical Research to meet some of the world's unmet medical needs.

Peter Cohan of Marlboro heads a management consulting and venture capital firm, and teaches business strategy and entrepreneurship at Babson College. His email address is peter@petercohan.com.